Dollar sellers hit pause for US inflation data

The dollar found support on Tuesday in Asia trading, holding steady as traders awaited US inflation data that could further boost its value. The Australian dollar surged nearly 1% to $0.6921, while New Zealand's currency gained even more, trading at $0.5624. The euro also experienced a rebound, rising 0.7% to $1.1220, after strong US jobs data swayed market expectations.

The dollar index has increased this year, as initial hopes for US interest rate cuts transitioned into predictions of rate hikes following the Iran-Israel conflict and surging energy prices. Economists anticipate headline inflation to rise to 3.9% and core inflation to 2.8% year-on-year in October. Should these figures surpass expectations, it could further strengthen the dollar.

However, concerns over AI regulation and a potential Democratic Congress could weaken US growth in 2027, potentially capping the dollar's upside. The British pound remained relatively stable at $1.3441, and the Japanese yen hovered around 157.97 per dollar, maintaining support from Japan's efforts to defend its currency through reserve sales.